$135.5m from Market City sale

The state government has completed the first in a series of planned asset sales, announcing that it has concluded negotiations with an industry consortium to purchase the Perth Market Authority’s Market City.

The consortium, Perth Markets Limited, was selected as preferred bidder in December and is led by the Chamber of Fruit and Vegetable Industries in WA.

The chamber represents fruit and vegetable wholesalers, including those that currently operate in the facility.

Other key investors included Brisbane Markets, Adelaide Produce Markets, United Crate Co-operative and ASX-listed Rural Funds Group, with the latter saying in an ASX release today it had invested $5.3million for a 9 per cent stake, implying all of the shareholders have invested a total of $60 million equity, with the balance being debt.

United Crate is a WA-based grower cooperative, owned by 116 shareholders, which supplies plastic crates and bins to Market City.

There are 60 individual investors in the PML consortium, which is led by former state opposition leader Paul Omodei, while Sumich Group owner Nick Tana is an independent director.

It is understood Mr Tana has taken a small stake.

Other directors include chamber president Trish Skinner, vice president Rick Smith and Brisbane Markets chief executive Andrew Young.

The chamber was advised by Azure Capital, while the state government had appointed EY and Jones Lang Lasalle.

About $136 million will be raised from the sale, a win for the state government as potential proceeds had not been included in budget forecasts.

Treasurer Mike Nahan said it was an outstanding result.

"It marks a major achievement as the first completed sale under the government's asset sales program, and affirms that state-owned assets present a great investment opportunity to the private sector," he said.

"Perth Markets Ltd has demonstrated a strong commitment to the continuation of the market function.  

“The consortium's experience in local and interstate markets will be a key to the ongoing success of Market City and WA's fruit and vegetable industry.”

The sale agreement comes just days after the state government’s credit rating was downgraded to Aa2 by international agency Moody’s, with the Treasury forecasting a peak debt level of around $39 billion before the end of the decade.

To rein in that number, the government has announced a series of other sales which are at varying degrees of completion.

Earlier this week, Gresham Partners was appointed as lead manager for the sale of a portion of the affordable housing financer Keystart’s loan book.

Others that have been considered include gambling agency the TAB and Fremantle Ports.

In total, the sales program is expected to earn $3-$5 billion.

The most significant potential option, and one which the state government has so far been reluctant to embrace, would be a sell of the electricity network owner Western Power.

That could earn the government up to $15 billion, reducing debt and providing a financial opportunity for capital reinvestment.

It would also put substantial downward pressure on electricity prices, if the experiences of Victoria and South Australia hold true.